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Thursday, January 19, 2017

What is the Medicaid Transfer Penalty Divisor in Pennsylvania for 2017?

For many Pennsylvania families qualification for Medicaid
long-term care benefits is critical to meeting the cost of care for a frail
family member. But, an applicant for this government assistance may be made
ineligible for benefits if he or she has disposed of assets for less than fair
market value during a five year look-back period.

Imposition of a transfer penalty denies benefits for
individuals who otherwise need and qualify for Medicaid long term care
benefits. A denial can also effectively make an individual’s children liable
for the costs of the needed care. See: Law
Can Require Children to Pay Support for Aging Parents.

The transfer penalty applies when a transfer was made by the
individual applying for Medicaid long-term care benefits, or their spouse, or
someone else acting on their behalf.

Unless the transfer is for some reason exempt, if an asset
was transferred for less than fair consideration within the look-back period,
then a period of ineligibility is imposed based on the uncompensated value of
that transfer.

New Penalty Divisor for 2017

The length of the penalty period is calculated by taking the
uncompensated value of the asset transfer and dividing it by the average
private patient cost of nursing facility care in Pennsylvania at the
time of application for benefits. The average cost to a private patient of
nursing facility care is often referred to as the “private pay rate” or the
“penalty divisor.”

The penalty divisor is revised each year as nursing facility
care costs increase. As of January 1, 2017, the penalty divisor is set at $321.95
per day. This means that the PA Department of Human Services has calculated
that the average monthly nursing facility private pay rate in Pennsylvania is
$9,792.65 a month. [The penalty divisor is different in states other than
Pennsylvania].

Uncompensated transfers made during the look-back period will
be calculated at one day of ineligibility for every $321.95 transferred away.
In Pennsylvania, a transfer penalty will be imposed when the value of transfers
made in a month exceeds $500.

The rules are complicated. Seniors considering making gifts
or other transfers of assets are well advised to consult with an experienced elder law attorney before
completing the transaction.

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About Me

I am a Pennsylvania lawyer with over 35 years experience in estate planning and elder law. I was selected by US News Best Lawyers® as its Lawyer of the Year in Elder Law for 2014 for the Harrisburg, Pennsylvania metropolitan region.
I am of counsel to Marshall, Parker and Weber, a law firm which has offices in Williamsport, Jersey Shore, Wilkes-Barre and Scranton, Pennsylvania. I am past President and a founder of PAELA (the Pennsylvania Association of Elder Law Attorneys). However, the views expressed on this site are my own and not those of PAELA or of Marshall, Parker and Weber.
Most importantly I am a husband, father and grandfather.